Metals start the week on a firmer footing

FastMarkets

Base metals on the London Metal Exchange are up across the board this morning, Monday June 19, as they have been for the past two business days, with lead, zinc and nickel managing to see follow through buying, while the others look less positive.

Prices are up by an average of 0.5%, with three-month copper prices up 0.3% at $5,688 per tonne and lead prices up 1% at $2,136 per tonne. Volume has been above average with 7,628 lots traded as of 07:10 BST.

This morning’s gains come after a generally stronger day on Friday when prices closed up an average of 0.4%, led by a 1.3% gain in tin prices, lead, zinc and nickel closed up an average of 0.4%, while copper and aluminium were little changed.

Gold prices are off 0.2% this morning at $1,251.59 per oz as the market consolidates, it closed Friday off 0.1% at $1,253.70 per oz. Silver prices are edging lower, while the other precious metals are generally consolidating.

In Shanghai this morning, tin prices are off 0.6% on the Shanghai Futures Exchange (SHFE), the others are up between 0.4% for nickel and 1.7% for aluminium, with copper prices up 0.4% at 45,740 yuan per tonne ($6,713 per tonne). Spot copper prices in Changjiang are down 0.1% at 45,340-45,590 yuan per tonne and the LME/Shanghai copper arb ratio is at 8.04.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up 1.7% at 437 yuan per tonne, while on the SHFE, steel rebar prices continue to rebound, they are up 2% while gold and silver prices are little changed.

In international markets, spot Brent crude oil prices are down 0.1% at $47.22 per barrel and the yield on the US ten-year treasuries has edged lower to 2.15%.

Equities ended Friday slightly higher with the Euro Stoxx 50 closing up 0.1% and the Dow closed up 0.5%. In Asia this morning, markets are firmer; the Nikkei is up 0.6%, the Hang Seng is up 1.3%, the ASX200 is 0.5% higher, the CSI 300 is up 0.8% and the Kospi is up 0.4%.

The dollar index at 97.15 is consolidating its recent rebound, so all eyes on whether the dollar has now put in a base. The euro is at 1.1204 is consolidating, sterling is edging higher, while the yen is weaker and the Australian dollar is firm at 0.7609.

The yuan at 6.8130 is looking weaker, most of the other emerging market currencies we follow are flat, although the Mexican peso is firm at 17.9110.

The economic agenda is light today, data out already shows UK house prices dipping 0.4%, the first decline in six months and Japan’s trade balance showed strong export growth of 14.9% in May and stronger than expected imports – both a sign of a healthy global market. Later today US Federal Open Market Committee (FOMC) member William Dudley and German Bundesbank president Jens Weidmann are speaking.

The slide in aluminium prices appears to have halted this morning with prices rebounding off a support line that was breached on Friday and copper prices are consolidating too. The other metals look firmer with rebounds underway in lead, zinc and nickel, while tin’s strong rebound, which continued in early trading with a 1.2% gain at this morning’s high, is now consolidating. With aluminium prices possibly turning the corner and rebounding, it may be that some general strength appears in the base metals, but we wait to see how much follow through buying interest there is. For now we expect sideways trading as the markets look well supplied.

Precious metals prices are, for the most part, retreating as markets consolidate as the need for haven assets has eased. Until geopolitical, or political tensions rise again, gold prices may remain on a back footing.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.